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tv   Global Economic Outlook Panel at World Economic Forum  CSPAN  January 28, 2018 11:21am-12:24pm EST

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of the union speech live at 9:00 p.m. we will also cure your reaction and comments from members of congress. of thent trump's state union address, tuesday night, live on c-span. listen live on the free c-span radio app. and available live on -- and available live on demand on your phone or tablet at c-span.org. >> the final session of the world economic forum featured central bank governors and financial analysts discussing the global economic outlook. taking part, christine lagarde, the managing director of the international monetary fund. this is just over an hour. so, i am delighted again to be moderating the global economic outlook. one would have to agree, it was rather and he unusual warm-up act. [laughter]
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i am greatly disappointed, however, that for some reason, they provide -- they forgot to provide the band. [laughter] [applause] which i think we would have enjoyed very much. the previous speakers said three things with which we could all agree. that growth is really important. that jobs are really important. free.at trade needs to be and i agree with this, and to be fair. , think those three points gross, jobs, and the nature of the trading system are pretty important for our discussion now. we are meeting at a point in well forthink, pretty the first time, since january west has a tendency to
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be behind the times, so they do not fully realize just how bad it was going to be. years of those 10 extraordinarily global economic optimism, and about a widely shared and synchronized recovery, so we will discuss the nature of that recovery, the risks in both directions to it, and the longer-term opportunities and challenges it creates. may introduceif i the panel very quickly. i have christine lagarde to my left. i think she has been a member of this panel for quite a long time. is theleft -- she managing director of the international monetary fund. next to her is the governor to me, but to others is the governor of the bank of england.
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lam, theeft is carrie chief executive of hong kong. governor ofeft is the bank of japan who has been a friend of mine for 40 years. we met at oxford. mary callahant is which is chief executive officer at j.p. morgan. i am looking very -- i am looking for very much to this panel. so, let's start with the short-term economic outlook and , --have just recently forecasting growth for this year and next -- so, what could go wrong? [laughter] celebrate what could go
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right for the moment because we are in a sweet spot, as i said. 3.9 is not bad. what is more interesting is 120 countries have actually seen their growth increase last year, and the only have about 1/5 of the emerging and developing countries that are seeing their gdp on a per capita basis decline. so, it is well spread out. and it is shared between emerging-market economies and part of the world i was certainly worried most about is sub-saharan africa, where we have a combination of factors that lead to lower income for capital. i think we should celebrate, we but weo that so often, should celebrate the policies that have been implemented by
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policymakers and by central bankers. i think one of the reasons we are in that sweet spot at the moment is the cycle of upswing, but largely attributed to multiple policies that have been implemented. monetary policies that we had no idea about 10 years ago. fiscal policies in many corners as well, which have been reasonably good. but it is thee, result of good policies. but what could go wrong, i will mention three vulnerabilities. first of all, financial vulnerabilities. and the u.s. tax reform would have positive effects in the short-term. lead to serious risks, and we can discuss that later if you want. and that has an impact on the financial vulnerabilities, potentially given the high asset prices that we see around the
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world and the easy financing that is still available. i would say the second risk is short and medium-term is the inequalities in many places that are growing and creating those fractures that klaus has identified at the world atomic forum -- world economic forum. and the third outside of risk i see is a lack of international corporation -- cooperation in the geopolitical risks that could happen as a result. >> those are huge points and will suddenly come back to them. let's turn to one of the central bankers, who is -- to has produced these outcomes -- who has produced these outcomes. central bankers have certainly become controversial, and have been described by well-known authorities is the only game in
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town. i think many of us feel that is true or in japan. there were three other arrows in s is the arrow that is gone the furthest. tell us about your remarkable monetary policy and how you're going to get out of it. [laughter] kuroda: thank you. let me first explain the status of the japanese economy. the economy is expanding moderately, supported by both international demand. real gdp has continued to grow for seven consecutive quarters, and the average growth is close to 2%. since japan's potential growth rate at this moment is slightly , growth in the last
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early,uarters is in the substantial improvement. unemployment rate has declined to less than 3%, actually, 2.7%, nearing full employment. in the economy has lasted over 60 months. this is the second longest boom in the postwar era. going forward, japan's economy is likely to continue its moderate expansion. from cycles from income to spending is expected to be maintained in both the corporate , as well as household sector.
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on the price front, annual consumer price infractions, fresh food, has been approaching 1%, but has remained slightly positive, excluding energy prices. in japan, strong economic recovery and relatively weak more than inout the u.s. or europe. however, we think that the output gap is further improving under labor market conditions and are tightening. while consumer prices are likely 2%, thease by
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deflationary mindset and change has been more tenacious than expected. therefore, the bank of japan will continue to support japan's economy and prices by pursuing persistenceing with under quantitative monetary easing. risks in theious short to medium term. but from my perspective, they are mostly external, including some geopolitical risks. >> can i follow up on one question because it is an issue that you face and mark carney doesn't. you have an economy that is growing significantly above
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trade for quite and extended period. that unemployment at 2.7%, which is clearly very low and falling. and you announced when you became governor, not you, the government and the bank of japan together, that you would hit the inflation target of 2%. most people would say, if the economy was like this, you would have gotten their. re. so why haven't been -- so why hasn't there been any inflation? thatow do you perceive with what we have been saying with the eurozone and the united states as well? mr. kuroda: there are two factors behind the rather slow response of prices to growth in the region and strong economic growth. , a is sort of universal common factor, like
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technologies, new may make inflation rather subdued. this is a universal factor. second, japan's factor, as i just said in my initial remark, that is to say after 15 years long differentiation from 1998 2013, differentiation and mindset of people expect the ,rices and wages to not drive and this kind of mindset is not as strong, and it is not so easy to eradicate this kind of japanese households
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and companies. indicationsre some that wages are actually rising, and some prices have already started to rise. and even medium to long-term inflation expectations, we have been so weak in the last couple of years, are now slightly picking up. so, there are many factors, may be being to the price inflation target. finally close to the target. >> ok. , as you promised the
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government you would deliver it. mark carney, you don't have a problem with low inflation at the moment? you do have the problem of --itoring -- of managing you have started a tiny increase in interest rates, so steps towards normalization. how do you perceive the monetary policy challenges for you and other central banks ahead in the strange environment of strong growth, but still generally wereined inflation, and among the other things people are concerned about is his normalization process might reveal more financial fragility that is now evident? what is the path forward? mr. carney: in the next 15
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minutes, should i answer that? [laughter] >> you can do it in two minutes. mr. carney: to do it in two minutes, let me generalize and talk about the overall normalization challenge, if i could. nature of the expansion is getting around 4% and is broader. the economy is growing faster. and it is also healthier. i will give you one example in terms of the acceleration of g-7 growth in the last year, 80% plus of that is been investment picking up and net trade picking up. this is not a consumer boom-led and acceleration. and all of them have consequences for normalization. the first slack being used up as the phillips curve coming back. in the face of bigger, secular
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pressures. and all of us have been discussing over the course of this week and at other times. a crucial point is as you get toward full employment, they call it a phillips curve for a reason. convex start to see the element of the slope, so the pickup should begin, maybe not degrees, so store we have to because just, but it will come. if you look at weight behavior in the u.s., the u.k., maybe i shouldn't speak for other economies, but you see that once youf wages which adjust for poor productivity growth and underemployment, and up until very recently, a relatively low turn in the market, it starts to fit together directionally. it is that aspect that is pushing up the second element
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towards normalization of policy. the second element is the healthier bit, more investment as part of the recovery, so investment picking up relative to savings. and we have seen a dick schaap in fiscal policy. think on average advanced economies have a 2% to 2.5% drag in 2010, 2014, now adding, especially if you use multipliers, but adding to growth. maybe half a percent or so on average across the g7. but that is a big, big swing. so investment up, savings down. pushing up on the equilibrium rate of interest. the third element i would highlight is just the stance of policy as a whole, if i could use the term for these purposes, the g4. members of the g7 who were practicing quantitative easing,
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and if you look at the flow of net fiscal issuance minus the bond being taken out of the market by acid purchases, but it was the doj or the fed, we shifted from collectively 2013 to 2017, basically no net flow. to this year, on the order of magnitude of about $1 trillion of net issuance based on announced plans, potentially, going up to $1.5 trillion or higher. so, in the context of normalization, you have a real economy providing some support for it. you have technical factors, which play into it. you have a really tough judgment to be made around where the equilibrium rate of interest is, which has been very, very low, and should be raising a bit.
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you can make a judgment about direction, but certainly not with any precision about degree. and so, that is going to require , one has a since he of direction -- one has a sense of direction, regime shift in terms of normalization, but a requirement for each of us to be quite prudent and patient as appropriate in making those judgments. the last thing i will say and that will not expand on it unless you want, the u.k. is in a unique situation in that over the course of the next year as the negotiations with the e.u. progress, we are going to find a lot more about what the supply capacity is in the near term what the right level of the exchange rate should be, and whether there will be terrorists tariffs for other trade costs.
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>> let me ask one follow-up question. mr. carney: i was trying to run out the clock. >> will come back to a moment. you have had a central role through the financial stability board in strengthening the global financial system. i get, and every time i write on this, hundreds and hundreds of comments below on the lines of, these crazy central banks have already, and if they have not already, will soon will have created the most -- asset price ever. bubble ever. and the crash will lead to total meltdown. this sort of thing. on a scale of one to 10, how likely is that?
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choose 1-0 risk. go ahead, all of you. big10, run away and get a umbrella. mr. carney: what is the probability it will be an adjustment in asset prices? that has probably gone up. if you look at corporate high-yield spreads, they have gone up. righteed that is the stance of policy, one would expect some adjustment there. other asset prices -- is whether then core of the financial system is in the position to amplify those maintenance -- to amplify those movements? i would put that is quite low because it is not just the regulators.
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it is the financial institutions represented here and across the world that have really transformed the liquidity and capital positions of the institutions. i will give you very quick numbers. precrisis, the coverage of short-term abilities for banks, particularly in the u.k., plus their access to central banks, was 10%. now it is 110%, so they are fully covered on all of their short-term wholesale liabilities. it is a huge move. but the overall level of capital standards have gone up 10 times, but the actual levels of capital have gone up about five times for the major banks. apples to apples in comparison compared to -- that is a huge shift. that would allow that system to withstand a shock of a disorderly brexit, which is a
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big call. is ween the last point have made a huge amount of progress in terms of reshaping the institutions, reshaping their business lines, being able to separate the retail component , and adding on top of all of that capital, big layers of alienable debt. totaljor banks have 25% loss absorbing capacity, so even if they go through that capital, there is another layer of securities that are held by institutional investors, who would find they are no longer debt holders. all of that provide real shock absorbing capacity for the core of the system that is not to say that asset prices could not change, but it is to provide a measure of confidence that is and when they do, even if there are sharp changes, the system
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isn't what amplify that impact. >> i think this is incredibly important. so the conclusion i would draw, too, one is that all of those worriedrs that who are the whole world will fall apart in the next couple of years because the massive price collapses should come down and feel absolutely relaxed. and the second conclusion, which is completely personal, that if there are any politicians in the world who are telling us that the continually rising stock market is an indication of how successful they are, they might find central base will get in the way. [laughter] to you, carrie lam. tell us about how the world looks from your perspective,
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both in hong kong, as a core part of the asian economy, financial center, and if you can, about the rather large place with which your closely connected into your norm? [laughter] ms. lam: yes. externallyand -oriented economy, but one of the freest and most competitive economies in the world, hong kong certainly benefits from the global economic recovery. we are doing really well. last year, we are projecting -- we were doing really well last year. it is considerably higher than of 2% in the preceding year 2016. christine kept on reminding us that -- i am pleased to tell you that i have not discovered a leaking roof in hong kong yet. but similarly, it is always good to strengthen the foundation. strengthening the foundation
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will enable hong kong to seize many the so it is available to china's economic policy, and also asia. because asia's growth accounts for significant gdp growth worldwide. and china makes a significant contribution. this is about a global economic situation. it justice be doing by talking about the global economy of hong kong. the china economic policy will be very relevant for hong kong. said the central governor would support hong kong being integrated in the national development strategy. two year, there were important speeches. one was at this forum at last year's davos. at that time, i suspected that the global economic recovery was
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not really certain. so, the president was talking about leaders in the areas economies -- in various economies propelling the economic growth globally. at thenovember last year aipac meeting, at that point in time, i think everybody was assured that there were bright signs of economic recovery. so the president talked about that we should really see he's the opportunity -- we should really sees the opportunity of a global -- putting in that context, i try to summarize for distinguished view ofhat the economic will uphold china free trade and economic globalization?
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that we should adapt to it and guided, and cushion its negative impact, and deliver its benefits to all. if the economic benefits are not shared by all, all economies will face one problem or the other. and it should be more reinvigorated, more inclusive, and more sustainable. so with that in mind, since the world is now seeing some driving forces for growth, i feel we should take this opportunity to include governance, to focus on more trade routes, to have more collaboration between central bankers and regulatory authorities, to put in place some social policies, to address issues that christine has incomed us of, poverty, andarity in an -- disparity employment opportunities for young people. values, andce those
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although we do not practice state planning under the basic law, we are built a free, capitalist society, but we will embrace those values to put in place and necessary social policies to make timely education, to enhance connectivity with the rest of the world, particularly with alliance. we signed with the fta and are negotiating several free trade agreements at this moment. so, i remain very optimistic about the short to medium-term future. we are externally-oriented. awaye keep the tsunami from us and we will be safe. .> just one follow-up question president trump, when he spoke year, i think the most substantive thing is what he
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said about trade policy. , two quite interesting things. , andlked very explicitly it is not new, about countries, although he did not name names, which are perceived to misbehave on intellectual property. and countries that are pursuing industrial policies with government subsidies. i think he used that word. and it is truly no great secret that when he says that, he is thinking about china. and there are those of us who are very concerned at the risk of serious trade conflict, and we have at the beginning of the week, seem relatively minor actions in this regard. from your perspective, running a place,eat trading
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connected to china and the u.s., too, how concerned are the people where you are that this actually might prove a very destructive development? how do you perceive that risk? ms. lam: of course, as i mentioned, being so dependent on free trade, we would not like to see any trade conflicts or trade wars, so to speak, but trade deficit is not something that we are not used to. i remember at a session that i shared with president trump at aipac, i gave him a figure. i said mom mr. president, the largest trade surplus in america called hong economy kong, and 31 billion u.s. dollars a year. and he seemed to be quite pleased with that. >> you did not threaten him with protection? ms. lam: he did not mention that. but coming back to china, as i
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discussions in the two speeches, china is a developing economy. it will evolve and build in those things that will make trade more transparent, fairer to everybody. but fairness must be to everybody. mary, imay turn to you, am interested to see if there is anything in the overall picture of the world that has been presented by these distinguished representatives of the sectors you disagree with. and i be particularly interested in your perspective of where you are, the impact of the tax reform, which is obvious the a very issue, and possibly on financial fragility as a of the private financial sector. mary: you know, i cannot help but see here, and we're all in
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this audience. this is the last panel of the 2018 davos event. and when we think about where we have come from and what we just heard from all the major economies around the world, i think the first and foremost have to thank mr. and mrs. schwab for being us -- for bringing us together to be committed to improving the state thehe world because decision to bring together not just policy makers in one area in central bankers and another and ceos and another and philanthropist and another, but altogether, to import and export the best thinking so that, and especially after the great financial crisis, how do we get back on a road where we don't have a boom and bust cycle? and here we sit nine years later, we could be in our second recession had we had the regular ups and downs. and we have a global economy
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that is expanding almost universally. and it is because, you look at the people appear on stage, and the other central bankers and policymakers around the world, and you think to yourself, how incredibly complicated this was to pull off? trillion put11 back into the system, but not in an unthought through manner. so we are sitting here, we have these people who have worked tirelessly. it is so incredibly complicated to have gotten this right. allwhat you have done for of us, especially the investors of the world to be able to invest in that, on behalf of all the pensioners around the world as a move toward their retirement, i cannot thank you enough for that. and i cannot thank you enough for giving all of these government jobs such a fabulous prestige, and something that all of us aspire to do even more so
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than in the past. and we thank you for that. [applause] >> thank you. >> fantastic. >> that is the nicest thing i have ever heard. thank you all for coming. [laughter] i am waiting for the but. mary: there is no but. it is incumbent on all of us as investors to watch what they are doing, and to not miss a beat. and not secure and think about the greatest worry in davos i have heard for the past several days is that there is not enough worry. people are worried that people are not worried. and it is ok to not be worried. it is ok as madame the guard said, to celebrate where we are, how we got here, and not miss a beat on investing so people can benefit from that. so that all the people around the world who have access to public markets can be able to
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participate in the recovery of what is happened, and continue to do so. so the opportunities, we can talk about them in the u.s., but they are everywhere. u.s., europe, emerging economies, being able to have participation in these companies, taking these policies and putting them back to work and reinvestment -- and reinvesting in their own communities and products and services is exactly what our job is to do. >> do you want to say anything about the great tax cut and how it will impact the u.s. and the world? mary: the great tax cut is really the great tax normalization. the u.s. was just out of lack. -- wack. the fact that we got it done was important for the u.s. competitive nature. how that goes back into play is a thing that is so exciting but the rest of the world because what happens in the u.s. can often be contagious for other countries. ceos in thethat the
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united states of america are not just doing one thing with those tax cuts, but doing multiple things. they are taking that money and helping the shareholders. you see more buybacks, you see more dividend payments. they are helping the customers of the companies. to will see much more m&a get better products and services and much more. and they are helping their employers -- employees. it is not just the one-time bonuses. it is wage increases, health care support, being able to help them and increase the retirement benefits. so, it is helping them to participate. additionally, companies are also taking that money and putting it back into their own philanthropic efforts in the communities they serve in the job retraining. if you can continue to see that across america, that is what capitalism is all about. toi am going to move on now come unless somebody wants to
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discuss the shorter-term risks, to the longer-term opportunity . i think the imf was the first one to say we should fix our roofs of the senate shining. sun iss while the shining. so the big issue that people are the people's state of productivity growth. some people seem to think tax cuts will be enough. but what is your view, christine lagarde, of the agenda of fixing the roof, making sure the cyclical recovery will be turned into an uptick in trend growth across the world? madame lagarde: thank you,
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martin. a couple of things that i would like to point out. one is the productivity numbers that we have are not satisfactory. productivity growth prior to the 1%.ncial crisis was it is now down to .3% in the advanced economies. that needs to be addressed. is theond point potential growth needs to be improved. while we are in a sweet spot, it is not going to last and many of the economies growing are growing above potential, which presents risks. ,rowth potential and reforms which are going to be country specific. each country has a roof of its need to focus on those two aspects. if i could focus on productivity
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and that will focus on the address thek, to lagging productivity we had, we need to invest in research development and facilitate innovation. we need more trade rather than less. trade encourages competition, fosters innovation and is conducive to improved productivity. that takes me back to my concern about lack of international cooperation. tradee more trade, better , fair trade, free trade, we need international corporation. -- international cooperation. we tend to see a degree of common denominator which is we all need that but it needs a reset.
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we need to look at state owned enterprise subsidies, sharing of ,ntellectual property rights income restraints imposed. the imf agrees with all of that. it needs to be looked at in a cooperative way. happen.that should i was pleased to hear that president trump mentioned the wto. it is one of the four in which those things can and should happen. innovation, one of the things that many of the leaders in the last few days, focused on and identified as one of the areas they want to invest in, will improve productivity. i want to thank you for recognizing the efforts we have endeavored. i do not think we have completed the job. having growth is good and
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improving productivity is good but making sure the results are properly allocated, properly distributed and that the growing inequalities that we see in in the-- in even -- are a threatomies to sustainable growth. [applause] can't imagine why. we don't seem to have any professional politicians so they cannot respond. one follow-up. i was interested when this came up. president trump repeated this just now. he said that under the right terms, the united states would consider negotiating to reenter the gpp as a multilateral endeavor.
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that is the first time i have heard this. you would have to regard that in terms of the trade agenda we have been hearing so much about as an encouraging development. i agree withgarde: you. i'm not sure it is multilateral in essence. the best is the enemy of the good. i think that is a good indication. one more area where international cooperation is key and favored by many countries, including the united states. it is the fight against corruption. we have not talked much about it and i do not want to spend much time on it that it is one area combined with rough it shifting, that is vital to give more hope and encourage our economy. ii think you wanted -- >>
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think you wanted to say something on this. >> i will start with the cyclical point which is we sued -- we should be seeing government productivity as we depreciate. hadother factor is we have lowinnovation -- innovation. part of the diffusion of moving to a new firm and setting up a new company, so we should get that at a time of great innovation. that is where you get the productivity pickup. as you are aware, we have a long ofl in most of our economies substandard firms. that is one of the elements. it then goes to structural policies around training, the elements that facilitate people to move to new firms. structural, i on
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agree with your emphasis and the emphasis of sharing the gains of trade. things that i would suggest that there be more thought given is the nature of the trade deals, how they can provide a dividend. it is the companies that benefit. people have put on free trade 's being an objective. sudden, that brings productivity and instant diffusion but also, trading services. when you think about having a positive set of discussions around trade, the lag of that up to the level of liberalization, that has that potential of having that bigger impact. >> does anyone else want to add
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something? >> thank you. complex, these most significant challenge faced by the economy is demographic .hange the working age population is shrinking every year by .5 million to one million. , wee the economy is growing are above the growth potential. really, a significant labor shortage is developing. sectore manufacturing
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which was compared with the u.s. manufacturing sector is less efficient, is now investing laborsavingigh-tech technology and investment. ai. also shortage, the labor not just business but also workers and trade unions are in favor of those new technologies movements being made. that is severely improving labor productivity, particularly in
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the nonmanufacturing sectors. respond ratheres slowly. -- respond rather slowly to the economic growth. in the long run, economic productivity and growth potential would make the economy sustain relatively high growth in coming years with price stability targets achieved. >> can i turn quickly because we are going to have to have time for at least three questions. mark, a risk we have not discussed.
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sector, the private internalized nation of what you called the tragedy of the horizon, namely climate change, which most of the world still thinks is a big problem. think we are getting at it? is the private sector beginning to have some recognition this is having significant implications? >> yes. to make it tangible, let me use one example. the task force on international climate disclosures. sectorrun by the private . the bottom line at the summit, president mccrone -- mackerel -- and the number of
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investors that have signed up, climate disclosure is going to whom invest and those to whom they land. -- they land. -- they lend. the two major proxy firms all signed up, etc. 18 trillion -- $80 trillion of balance sheet with an expectation that working with the users of capital, we are going to get into a better place in terms of disclosure, not just of static risks but of strategy and governance. together, whether you are a aeptic or a believer, we need market in the transition to a lower carbon future.
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i salute the private sector on this because they were passed this by the private -- public sector and now the question is implementation and improvement. -- is thereis anything you would like to add? >> it does not matter if you believe in climate danger or not. therefore, the investors have to figure out how to do that. it is about the prevention of what happens when you have all these things happening that must be addressed regardless of what you believe in. if you look at amsterdam, it's infrastructure is set to protect yearf or a one in 10,000 event. next city, one in 100 year. one inblem is, we have
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500 year even's. if you look at hurricane katrina, a cost the government $120 billion to fix something that had 10 million dollars been spent by the u.s. army corps of engineers to figure out there was 10 feet of wall that should have been expanded and build, we could have saved $120 billion. you have to invest in infrastructure to protect things in the future. what we are going to see from the u.s. government is the next phase of take investment in infrastructure, asking for private partnership. that is the next wave. >> that is very encouraging. the dutch do understand the danger of water. i am going to take three questions. they must be one sentence. you can address it to one person. i probably will not be able to
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give more than one person an opportunity to answer. stand up and say who you are. >> ministry of finance, guatemala. do think that the speed of urbanization has slowed down? justelement is not productivity. it is the capacity for agreeing on things. slowing urbanizing nation, is that what you said? >> yes. >> anybody else want to ask a question ? i think there should be gender equality. >> good afternoon. the world has changed.
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of 2% forhe target inflation is still realistic? >> very good. ok. apologize to all those i will not manage. know aboutwhat we the lessons of the financial crisis, are there any fundamental changes you would like to see major in the macroeconomic policy framework? are there major things we need to do to improve it? >> this is the envelope for the second question. may i start with you, christine? the suggestion was made that productivity growth is slowing in part because of the fundamental drivers, particularly urbanizing she and. i think that is important. -- particularly urbanizing
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factors. i think that is important. how does the imf see the balance? >> a bit like you just said. asian --he urbanizing , the finance, islementation and so forth clearly a slowing down factor. there is also population aging, mainly not so much in the emerging market economies. there is delayed investment which has not helped. there are multiple factors affecting it. increased urbanization is one of them. can i say a word? that number on inflation was not
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decided randomly. it was calculated carefully. there are areas in the world at an average 2% inflation target in a particular zone, it- currency might be appropriate for some countries in that zone to target a rate higher than 2%. >> i'm going to ask you about the inflation, governor. you had almost two decades of it seems to beow suggested that 2% is too low. your plenty of room to maneuver. ?hat is your view are you trying to hit a target that is already outdated? targetink 2% inflation
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is still meaningful, relevant, for managing manufacturing policy. a few points. one, as you may know, consumer toce indeces tend overestimate real price development. if you're inflation indicator , you must aimtion at achieving positive inflation than 0%rather inflation. the second point is there continues to be some cyclical movement and when you need to
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accommodative expansionary monetary policy, room.ve to have policy toorder to do so, you have keep reasonable inflation your policy atch some positive level and you can substantially reduce if you need to. policy room is necessary. years of trialny and experimentation, almost all central banks in the developed world have adopted 2% inflation
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target. i think this has become a global medium andder which long-term exchange rate relationships between major currencies tend to be stable. target has been well established, although some economists are arguing for higher inflation targets or price targets, nominal gdp targets and so forth. there may be good reason to consider but at this moment, i think after 10-20 years of experience among major central think this 2% or so
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inflation target should be stability for price and for economic growth. >> 30 seconds. quickly, ben bernanke's id on temporary price targeting making it clear that that is a possibility is an interesting idea. we looked at it in the u.k.. it is hard to do because of the quality of data and it is tough to do in the middle of that circumstance. obviously, what ben and charlie had proposed is different. it merits some consideration in quiet seminars. the only point i would make is i do not think monetary policy in the macro policy tool was the mishandled element.
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i have been saying this for 10 years. the element was fiscal policy. it was used very effectively, very early, and it was withdrawn much too soon. that created some big problems. minus 10 seconds. i'm going to summarize our in the following five points. we have a wonderfully strong recovery which is cyclical and we want to make structural. consensus on is a this panel of those who are not thatnsible for all this the official sector has done a wonderful job in getting us here. this is a time to be generous and i'm going to go along with that. in all other days, when i write my columns, i am not bound by that recognition. i think it is fair.
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it could have been very much .orse in the interwar. , it was. three, this provides us with an opportunity to improve policy on a whole range of dimensions and christine has emphasized some of the most important, which include the distribution of the benefits of growth. fourth, the only thing to fear is the absence of fear itself. there are many other things to fear but the absence of fear always terrifies me. we have been told very confidently that the financial is strong. finally, if we are thinking about fear beyond the financial sector and the possible meltdown of asset prices, whatever that might do, there are plenty of
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significant, domestic, political challenges,conomic such as trade policy and beyond that, we discussed climate. --anyone leaves leaving feeling the complete abstinence of fear, i suspect they are in the wrong job and in the wrong place. with that, may i think the panel for a wonderful discussion. [applause] onouncer: one of the topics the sunday shows today was the russia investigation. questions centered on the memos circulated within the house intelligence committee which deals with alleged abuses within the f the eye. we will hear from white house legislative director, mark short, congressman trade gowdy d

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